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Estimated income statements, using absorption and variable costing Prior to the first month of operations ending October 31 Marshall Inc. estimated the following operating result:

Estimated income statements, using absorption and variable costing

Prior to the first month of operations ending October 31 Marshall Inc. estimated the following operating result:

Sales (30,400 x $106). $3,222,400

Manufacturing cost (30,400 units):

Direct materials. 1,939,520

Direct labor. 459,040

Variable factory overhead 215,840

Fixed factory overhead 255,360

fixed. Selling and administrative expenses. 69,500

variable selling and administrative expense 84,000

The company is evaluating a proposal to manufacture 33,600 units instead of 30,400 units, thus creating an Inventory, October 31 of 3,200. Units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.

a. 1. Prepare an estimated income statement, comparing operating results if 30,400 and 33,600 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank or enter 0.

Marshall Inc.

Absorption costing income statement

For the month ending October 31

30,400 Units Manufactured. 33,600 Units Manufactured

____________________. $. $

Cost of Goods sod:

_____________________. $. $

______________________. $. $

______________________. $. $

_______________________. $. $

_______________________. $. $

Income from operations. $. $

a.2. Prepare an estimated income statement, comparing operation results if 30,400 and 33,600 units are manufactured in the variable costing format.if an amount box does not require an entry leave it blank or enter 0.

Marshall Inc.

Variable costing income statement

For the month ending October 31

30,400 units manufactured. 33,600 units manufactured

___________. $. $

Variable cost of goods sold:

_____________. $. $

______________. $. $

_______________. $. $

________________. $. $

_________________. $. $

_______________. $. $

Fixed costs:

________________. $. $

_________________. $. $

total fixed costs

_______________. $. $

b. What is the reason for the difference in income from operations reported for the two levels of production by the two levels of production by the absortion costing income statement?

The increase in income from operations under absorption costing is caused by the allocation of ____ overhead cost over a _____ number of units. Thus, the cost of goods sold is _________. The difference can also be explained by the amount of ________ Overhead. cost included in the _______ inventory.

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